Bancolombia, which is the most used bank in Colombia, has recently been in the news for the wrong reasons. Its app isn’t very stable and some Bancolombia clients have found themselves without access to their account for a few days, seen all their money disappear, or even received some extra money in their account due to technical glitches that took the bank a while to resolve. Since I don’t enjoy worrying about my finances, I decided to look at some of the alternatives that are available in Colombia.

My story with Bancolombia started in 2017 when I opened my account with this institution. I didn’t know much about living in Colombia, so when the bank employee asked me if I wanted to sign up for an insurance policy that would protect me in case of getting robbed, I said yes. Some time later, I realised that this service wasn’t what I needed and tried to cancel it. Bancolombia informed me that they had nothing to do with the service and told me to contact BNP Paribas Cardif. I did so, but to my surprise, I received a letter telling me that I had never been their client and there was nothing to cancel. That was a bit weird since they were more than happy to keep deducting a fee for the insurance policy each month. In the end, I had to report BNP Paribas to Superintendencia Financiera de Colombia, which did the trick and finally helped me to get the unwanted service cancelled.

Another interesting feature of being a Bancolombia client is that I keep receiving emails asking me to fill out this FATCA form to confirm that I am not a tax resident in another country. I must have submitted the form at least 10 times, yet the emails keep coming. They are getting more threatening in their wording, telling me that my account will be blocked if I don’t fill out the form. I have contacted Bancolombia’s customer services several times and even went to the bank in person once due to this issue, and the response has always been the same: I’m supposed to ignore these emails, which are apparently sent to me by mistake. Again, this isn’t a very comfortable situation to be in, is it?

Even if your account doesn’t suffer from these technical glitches or whatever causes all the problems, using Bancolombia’s so-called savings account actually means losing money due to handling fees and extremely low interest rates. There are quite a lot of unhappy customers like me, so it’s not surprising to see that other institutions are coming up with interesting offers in order to attract new clients.

Opening an account with another traditional bank would mean similar (or maybe even worse) issues, so I think it’s time to look at alternative options. Neobanks are essentially online banks (typically mobile applications) without any physical branches. They offer financial services that can make your life easier, and this blog post lists the most popular neobanks that are active in Colombia. Please note that the interest rates and products offered will most likely change in the future, so you definitely need to do your research and read the terms and conditions first.

Ualá (uala.com.co)
This company, which was originally set up in Argentina, offers a savings account with a 13% annual interest rate and a Mastercard debit card. Apart from paying in shops and online with the card, you can use the app to do bank transfers and pay for stuff via PSE without any hidden fees. You don’t even get charged for withdrawing money using other banks’ ATMs, which is amazing. I currently use Ualá for my daily transactions and the money that is generated in the account actually covers some of my expenses.

The registration process is very simple: to sign up, you need to take a selfie and a photo of your cédula de extranjería. What I really like is how transparent everything is and the fact that the interest is added to your account every single day. The best thing about the Ualá account is that if you spend less than 3 million pesos per month, the 4×1000 tax is not applied. As a result, Ualá is a great option for buying groceries, general shopping, paying utilities, and withdrawing cash.

The main disadvantage of Ualá is that you aren’t allowed to have more than 9.6 million pesos in your account, which means it can’t be used for moving large amounts of money. This service is better suited for making common daily transactions, both in-person and online, and thanks to Ualá I don’t really need to use my Bancolombia debit card anymore.

Nubank (nu.com.co)
This is by far the most successful neobank in Colombia. It was set up by David Vélez, a Medellín-born entrepreneur who originally wanted to simplify banking in Brazil. Nubank is very good at marketing and its mobile application is extremely easy to use. In addition to a savings account with a 13% interest rate, Nubank offers a no-fee credit card.

When I created my account with Nubank, I needed to take a selfie and upload a photo of my cédula de extranjería. I also had to provide my bank statements from the previous three months. Since Nubank offers a credit card, it doesn’t approve all applications, and your current income will determine how much you will be allowed to spend per month using the credit card. I think Nubank is an excellent option for those who want to build up their credit score in Colombia. Since there are no hidden fees, it makes sense to use your credit card in shops or online (you can generate a fully virtual card in the app, which is a brilliant feature) and pay everything in full so you don’t get charged any interest.

Nubank provides its clients with two kinds of accounts. One is linked to the debit card and can be used when you need to buy something; the other one is called Cajita, and this is the true savings account where you keep your money and see the interest added every day. You can freely transfer funds between the accounts at any moment, so you have full control of what happens with your money. There are no limits and you can have as much money as you wish in your savings account. However, each ATM withdrawal incurs a fee of 6,800 pesos.

I’m really interested in seeing how things go with Nubank. At the moment, the only thing that prevents me from marking the account exempt from the 4×1000 tax (you can choose only one of your Colombian bank accounts for that) is the fact that it doesn’t allow international bank transfers. If that changes in the future, I can imagine using Nubank as my primary bank account.

Lulo bank (lulobank.com)
Unfortunately, this bank requires you to be a Colombian citizen to be able to open an account. Its savings account with a 13% interest rate doesn’t seem to have any limits and can be used for PSE transactions, so I’d be happy to try it out, but it’s not meant to be at the moment.

Pibank (pibank.co)
If you have some extra money that you don’t plan to use in the near future, Pibank offers a savings account that is not linked to a debit card. You can send and withdraw your funds only using a bank transfer, which I suppose motivates clients to leave the money in the account. The interest rate of the savings account is the same as in the case of the previously mentioned banks, so this offer doesn’t look that attractive at the moment. Another product you could choose is a fixed term deposit (CDT Pibank), but it actually has just a 11% interest rate. In any case, this seems to be an interesting attempt of a traditional bank (Banco Pichincha) to get involved in the neobank market.

Rappipay (rappipay.co)
Rappi is a huge Colombian company known mainly for its delivery app. It currently offers financial services as well, namely its credit card RappiCard and savings account RappiPay. The latter’s 14% interest rate looks very appealing, but it’s very important to read the terms. If you have less than 2 million pesos in the account, the interest rate is actually just 1%. The standard rate is 10%, which is still good, but to achieve the 14% rate you need to mark your account exempt from the 4×1000 tax, which won’t suit everybody. In addition, Rappi has grown a lot in recent years and unfortunately it isn’t known for efficient customer service, which is something to consider before opening an account with this company.

Four things to bear in mind
While the current interest rates are very attractive, keeping them so high probably isn’t sustainable. These neobanks are currently trying to get as many new clients as possible, and I won’t be surprised to see the rates decrease in the near future. Even if that happens, I think a reliable neobank will provide you with better services than if you choose a traditional bank here in Colombia.

If you want to use a savings account in Colombia, make sure the institution is protected by Fogafín, a financial authority that will help you recover your money if your bank goes bankrupt. You can find a list of protected institutions here. Please note that the maximum amount covered by Fogafín is 50 million pesos, so you may need to split your savings and keep the money in different institutions.

Another important figure to take into account is 7.7 million pesos. The reason is that if you have more than that in your savings account with a 13% interest rate, a 7% tax applies to your earnings. To be specific, this deduction will take place if your account generates more than approximately 75,000 pesos per month. It’s not a big deal, but don’t be surprised to see a fraction of your money deducted from the account each month.

And finally, be careful! These apps are so easy to use, which means it’s very easy to get scammed. Don’t trust anybody, especially those random people who message you on WhatsApp or Facebook – remember that you can contact customer service directly through the banking application. The apps are safe, but if you use them to send money to fraudsters, you’ll probably never see it again. Use common sense to avoid phishing attacks and your experience with neobanks will most likely be positive.